Immigration and the Labour Market: Theory, Evidence and Policy

The current economic downturn has led to questions over the value of economic migration. Public opinion supports the view that immigrants take natives’ jobs and reduce their wages, but most economists disagree. Although basic laws of supply and demand suggest that immigration could reduce wages by increasing the supply of workers, in reality the economy also responds to immigration by increasing demand for labour.

This means that the actual impact of immigration is likely to be small, especially in the long run.

Insofar as there is a consensus arising from economic research on immigration, it can be summarised as follows: the impact of immigration on the average wages of all workers is small. There are almost certainly distributional effects – some workers do better than others. Overall, however, other factors such as education, trade, outsourcing, demographic change and technological change affect wages and employment much more than immigration.